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Unemployment at highest level in 25 years

By -
The Washington Times -
Saturday, June 20, 2009

The turmoil ravaging General Motors and Chrysler generated big jumps in joblessness last month throughout the Midwest, sending Michigan's unemployment rate above 14 percent and pushing three nearby states into double digits.

Jobless rates in Illinois and Indiana surpassed 10 percent, while Ohio's approached 11 percent, according to data released Friday in a Labor Department report.

The half-percentage-point jump in the national unemployment rate rippled throughout the country as 48 states and the District of Columbia reported increases in their jobless rates in May.

The U.S. unemployment rate rose from 8.9 percent in April to 9.4 percent in May, its highest level in more than a quarter-century. The rate was 10.8 percent near the end of 1982.

The Michigan unemployment rate soared from 12.9 percent in April to a national peak of 14.1 percent in May.

"If you count marginally attached workers, discouraged workers and workers employed part-time for economic reasons, the 'true' unemployment rate is much higher - 17.2 percent in the past year in Michigan, according to the Bureau of Labor Statistics," said Peter Ruark of the Michigan League for Human Services.

Jobless rates in Indiana (10.6 percent) and Illinois (10.1 percent) jumped over the 10 percent hurdle for the first time since the longest postwar recession began in December 2007. The unemployment rate in Ohio, which entered double-digit territory in April, jumped to 10.8 percent in May. Like Michigan, those three states were hammered by the auto industry's problems.

The jobless rate in California, which faces a staggering $24 billion budget deficit in the fiscal year beginning in less than two weeks, climbed to 11.5 percent as the Golden State shed 68,900 jobs last month, the most of any state.

Thirteen states now carry double-digit jobless rates, including Oregon's eyebrow-raising 12.4 percent; South Carolina's 12.1 percent, which is matched by Rhode Island; Nevada's 11.3 percent; and North Carolina's 11.1 percent.

Besides Illinois and Indiana, the other states that joined the double-digit ranks last month were Florida (10.2 percent), Kentucky (10.6 percent) and Tennessee (10.7 percent).

Locally, the unemployment rate in the District of Columbia hit 10.7 percent in May, several percentage points above Virginia's jobless rate of 7.1 percent and Maryland's 7.2 percent.

Since the recession began, the U.S. economy has shed at least 6 million jobs.

Analysts expressed optimism over the fact that the 345,000 jobs lost in May were roughly half the average monthly job losses recorded during the previous six months. However, in percentage terms, May's loss of 345,000 jobs was still higher than the percentage of jobs lost in all but one month during the two previous recessions, observed Lawrence Mishel of the liberal-oriented Economic Policy Institute.

During the first 18 months of the recession, the national unemployment rate has soared from 4.9 percent to 9.4 percent. Most economists expect the national jobless rate to exceed 10 percent this year.

Even President Obama projected this week that the U.S. unemployment rate would eventually reach 10 percent. That's about two percentage points above the level that his administration forecast when it released its fiscal 2010 budget and pushed for the $787 billion economic-stimulus package that Congress passed in February.

Most economists forecast that a recovery, when it comes, will be so sluggish that the unemployment rate will continue to rise for some time after the economy begins to expand again.

The sluggish expansion "will not look like the end of the recession to people since we will continue to see employment losses," Mr. Mishel said.

Employment continued to fall long after the last recession ended in November 2001. In fact, Mr. Mishel noted, it wasn't until April 2004, a lengthy 29 months later, that employment finally returned to its November 2001 level, which was the trough of the recession.